EFTA01378339

INTERNAL USE ONLY DO NOT DISTRIBUTE IN PART OR IN WHOLE Corporate Credit > U.S. High Yield Energy Transfer Equity Updated: November 6, 2015 Trade Idea: ► Buy 5.875% 2024 Bonds Investment Rationale: ► Energy Transfer Equity reached an agreement to merge with Williams Cos., an investment grade entity. It will create, according to the company, the largest energy infrastructure company in the US. The benefit of the merger is to make the assets across the companies more efficient and synergistic, so we expect ETE to move assets within its listed units and undertake projects that are related to this. ► ETE indicated that the transaction will accelerate it to towards investment grade ratings. ► Pro-forma for the merger on E2015 EBITDA (calculated as distributions from subsidiaries and EBITDA from any operating assets held), we calculate leverage as 4.3X. ► In the near term, bonds appear to be priced about in•line with the HY BB index. Long term, however, prospects are better, as in 2 or 3 years there is a good chance of an upgrade to IG. I would rate the 2024 bonds +1, given the balanced risk reward for the outlook. View 'rade Horizot Ticker +1 12 months ETE Cpn 5.875% Maturity 1/15/2024 Ratings S&P Moody's Bat BB Ccy USD Issue Size 1,148 YTW 6.27% OAS 415 Cash Price 97.5 Target 100.0 Loss 94.0 ISIN US29273VAD29 Deutsche Asset & Weah Management CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0075508 SDNY_GM_00221692 EFTA01378339